A business letter of intent template is a document between two parties that are intending to get in a business transaction with each other, but it isn’t legally binding. So this document is used to secure it legally and formalize the transaction. There are many agreements for which, business letter of intent can be used. Such as joint venture agreement, merchant agreement or real property lease agreement. In this document, the involved parties outline the conditions and terms of the agreement. It also includes the responsibilities of the parties. Even, this business letter of intent is not legally binding, but it does increase the chances that the agreement will happen, and the transaction will be carried out.
Why A Business Letter of Intent is Crucial?
There are many purposes for a business letter of intent and it differs depending on the situation. But one of the important and main purposes of this document is that it provides protection to both the parties that are involved even though it is not legally bound. Few other purposes of writing a business letter of intent are to write the terms and agree on them. There are also a few processes for which you will be required to make this document, such as sometimes when you want a loan from a bank, you can only secure it if you have this letter.
Elements to Include in Business Letter of Intent:
Before you start writing this letter, you should know what all inform you need to include in this letter. You should also remember that even though you can add as detailed information as you want, avoid adding any specific dates which can result in turning this document into legally binding. You can use the material that’s written below to write a business letter of intent:
Introduction: The first step in writing this letter is that you should introduce the purpose of writing it and you should mention the names of both the parties involved and what are their roles. You should also write what is the reason for the transaction and what are you buying or selling.
Information Related to the Transaction and Time-frame: In this part you should write more details about the transaction; you should also include what type of business deal it is and add the purchase price but it is possible that the amount can change in future. You can write any possible timeframe for the negotiations in the future, but it should just be a guideline and can be changed in the future.
Add that the Agreement is Non-binding: It is also important to add in your letter that this agreement is non-binding for both parties, except for any part that you have stated, are binding.
Include a Closing Date: You should also add a date by which the parties should conclude the deal and the agreement will be over. And if any of the parties have not concluded the deal by that date, then the transaction that was supposed to happen and the business letter of intent both will terminate.
